Wall Street Analyst Said He'd 'Crawl On Broken Glass' For A Deal

"I would crawl on broken glass dragging my exposed junk to get
this deal."

That's what an eager equities analyst at Needham &
Company
wrote in an email to a colleague, upon learning that a rival
firm would be gunning for some much-desired IPO business from
Toys'R'Us.

Crain's
called that gem "the Wall Street quote of the year," but it
was actually written back in 2010. That's when Toys'R'Us first
started planning their IPO, and a handful of research analysts
began pandering to the company in hopes of winning some business.

We're hearing about it now because FINRA today announced
it would fine Needham and nine other firms for the incident.

The toy giant actually sponsored the 10 firms to compete for
roles in the IPO. They didn't ask the firms to overvalue them,
but nonetheless each firm chose to use research analysts in their
bids — many of whom met with and made presentations to Toys'R'Us.

This sort of behavior from equity analysts, who are meant to be
unbiased researchers, is not unprecedented. But Eliot Spitzer
made a solid attempt to wipe it out when he was New York's
attorney general.

Back in 2003, Goldman Sachs and JP Morgan were fined $110 million
and $80 million, respectively, for similar brown-nosing
incidents. This time around, they're being fined $5 million each
for their Toys'R'Us coverage. (They must have learned something
from those FINRA run-ins, because their violations were a bit
less graphic than Needham's.)

Altogether, FINRA will collect $43.5 million from the firms,
which also include Barclays, Citigroup, Credit Suisse, Deutsche,
Merrill Lynch, and Wells Fargo.

Jokes on them because Toys'R'Us never ended up doing the IPO. But
they certainly did leave these guys – and their junk –
exposed.